It might be easy to confuse the rioting in Kuala Lumpur at the weekend with the tensions over the short-term politics of austerity in Europe, but it was about something more profound: the possible end of the most electorally successful political coalition in the broadly democratic world.

Malaysia’s National Alliance government has been in power since 1957, with regular elections throughout that time that haven’t been perfect but stacked up reasonably well alongside its peers.

The country’s economic performance has also stood out over that time. Malaysia has enjoyed average annual growth rates of about 5 per cent for four decades.

But both records are under severe strain because the country has fallen behind some peers in electoral transparency, media controls and judicial integrity. Its economic performance is suffering from a system of affirmative action towards native Malays, which has embedded corruption and waste when Malaysia needs to avoid the middle income trap.

Prime Minister
Najib Razak
and Opposition Leader Anwar Ibrahim competed to inherit this system when they were rising ministers under one of its designers, Mahathir Mohamad, but now they are competing to remake it.

Mr Najib has to persuade enough hardline Malay nationalists to let him make the kind of political and economic reforms that have been made in places like Indonesia and Thailand. But the conservative, racial conflict-averse Malaysian population might again decide it has done OK by regional standards. While his public approval has gone up this year, the government’s has gone down.

So Mr Anwar should be the favourite, given the government’s time in power and his narrow loss in the 2008 election. But he has to keep a lid on inherent tensions within his coalition of conservative rural Muslims, old Chinese leftists and urban social activists. He needs to win the support of younger, more integrated Malaysians who don’t fear the racial conflict of the past.

So the weekend rioting could rebound on both men, adding to the uncertainty over whether Mr Najib will call an expected snap election in the next few months after budget handouts in October or risk an economic slowdown in the run-up to the poll deadline early next year.

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Government hardliners were demanding the protest organisers be held accountable, although the police, presumably with Mr Najib’s approval, took the conciliatory route of releasing all detainees.

Mr Anwar, on the other hand, faced claims he incited the takeover of Kuala Lumpur’s Merdeka Square by his supporters, even though the event was officially organised by a notionally non-partisan reform group.

The stakes have clearly risen in an election that will reveal much about whether one of Asia’s earliest economic modernisers and Australia’s ninth-biggest trading partner is keeping pace with the trend towards democratic regime change in the rest of the region.